Steemit Crypto Academy Season 3-Week 1 Assignment| What is Cryptocurrency Trading and on what platforms can we do it?
Hello everyone, I'm very happy and excited to be part of this great class. Since this is my first time of joining the Academy I see it as a dream come true. I have learned a lot after going through this week's lecture. Today, I will be presenting my assignment after reading through the @lenonmc21 class on the topic "What is Cryptocurrency Trading and on what platforms can we do it?" I will begin with my presentation now since time is not our friend here.
DEFINE IN YOUR OWN WORDS WHAT TRADING IS, WHAT IS ITS FUNCTION AND HOW IT RELATES TO THE CRYPTOCURRENCY MARKET.
The word trading have different meaning with respect to the field or area in which it's being used. This means different people have different understanding and definition of trading. But trading in the lay man's understanding is the buying and selling of goods and services.
During trading, there is always a mutual agreement which had to be met before the activity take place. In trading, the seller is the one who is willing to sell his goods at a particular rate or price whilst buyers are as well willing to buy at the same price. In simple terms, trading is defined as the buying and selling of financial assets. Financial assets can be Forex, Cryptocurrencies, shares, bond etc.
In the Crypto world, a trader or investor can buy an asset at very low price and sell high if the price increases to make a profit, or as well as sell at a high price to buy the asset at a low price. Because of how volatile and unstable this assets are, a trader can decide to buy the asset when prices falls and later sell them when there is an incremet in the price of the asset thereby making a profit.
It can also happen that after buying the asset at a low price, instead of it to increase as we are all hoping for, it will rather falls even more and if the trader decides to sell at that price, then he will be making loss.
In my understanding from the lecture, Cryptocurrency Trading is the buying and selling of crypto assets which can be in the form of coins, tokens, contracts or bonds. One good thing about this coins is that, they have a good potential to serve as currencies in the future.
These coins are used in the buying of goods and they can be traded for profit or gain.
A very good example of crypto trading is purchasing a coin (ETH) for $1,000 and later sell it at $3,000. This is a profit to the trader as he has $2,000 additional but when the trader buys the coin (ETH) at $1,000 only to sell at $500, then there is a loss of $500 after the trade.
DEFINE AND EXPLAIN WHAT ARE THE TOOLS USED FOR TRADING (TECHNICAL ANALYSIS AND FUNDAMENTAL ANALYSIS) ANY AT LEAST ONE EXAMPLE OF EACH. (A SCREENSHOT REQUIRED)
MAJOR TOOLS FOR TRADING
The two major tools for trading are fundamental and technical analyses. In this section, we are going to look into it one after the other in terms of trading and then as it relates to crypto trading.
FUNDAMENTAL ANALYSIS
As a trader who is determined to make profits, it's incumbent on you to do certain research about the asset you are planning to buy. In order to determine the value of that asset through assessment, a certain key method must be used. This method is called Fundamental Analysis.
In this analysis, the analyst would always make use of macroeconomic circumstances like the state of the wider economy, other businesses connected to the asset and the conditions of various industries or companies.
The main target of the analyst is to determine whether the asset is overvalued or undervalued in the market. We undertake this analysis because, it has a greater impact when it comes to helping and assisting investors in making their investment decisions.
Taking into consideration, fundamental analysis in crytocurrency, it may involve the evolving field of data science. This data has to do with relevant blockchains information of which the asset associates itself with. Example of the scientific data include top holders of the asset, number of transactions, number of addresses, the amount of people using it, or the team behind the project and among others.
Forex market for example adopts financial analysis and usually used them in their various activities but in their current state, they are less suitable for cryptocurrency.
It is very important to bear in mind that the crypto market is mainly driven or moved by speculations like rumours and narratives, because of that fundamental analysis will not have very significant effect on these digital assets.
Examples of fundamental analysis is seen below:
Another example of fundamental analysis is shown below;
This statement from Elon Musk made the price of Doge coin to rise massively meaning that investors will be willing to sell at that particular rate. The same applies when he talks about something bad about the currency. Here, Elon Musk is behaving as a whale but he rather have influence as a richer man.
TECHNICAL ANALYSIS OF TRADING
Technical analysis can be seen or described as the ability of an investor to use either the present or past data of an asset to predict or determine the future of the asset in the market.
An example is using DOGE COIN. With doge coin, there have been predictions from experts and analyst that its price might hit $1 in the coming years. This analyst don't just speak their mind but they look at the trends and number of people purchasing the coin. About a month ago, Doge coin rise up to $0.35. This actually means that doge coin have the potential to really hit $1.
Examples of technical analysis is shown below;
There are also some factors to which one can use to determine the future of an asset and it’s as listed and discussed below.
1. UNDERSTANDING THE MARKET CAP: Market cap is a platform which can help an investor to predict the future of a coin. The coin market cap helps the investor to know if it has significant effect and influence in the market through their volume and liquidity at which it has been traded.One can always do this by using the www.coinmarketcap.com.
2.USING THE MOVEMENT OF THE TREND LINE CHART: Trend lines are lines that are used to show the movement of the asset. When trend lines move upward, it means the prices of assets are rising and when it moves downwards, it indicates that the prices of goods are falling. This also requires skills to understand before trading technically trading crypto.
NAME AT LEAST 3 TRADING PLATFORMS WITH THE HIGHEST TRADING VOLUME WHERE WE CAN BUY OUR FIRST CRYPTOCURRENCIES AND EXPLAIN IN YOUR OWN WORDS THE WAYS TO BUY CRYPTOCURRENCIES ON THAT PLATFORM.( SO NOT USE BINANCE)
In other to name three exchanges with the highest volume where traders can buy their first cryptocurrency, I have to use coinmarketcap.com. then click on the exchange button, followed by spot.
After the exchange page appears, I will be picking 3 exchanges with high volumes, they are Huobi Global, Bittrex, and Coinbase. But one thing to bear in mind is that not all exchanges can work in all parts of the world.
HUOBI EXCHANGE
To purchase coins on Huobi exchange, first, visit the Huobi exchange website (https://www.huobi.com/en-us/)
After visiting the website, you need to log into the exchange. But I'm new there so I have to register first.
The next step is to log in, you need your email and password. After login, you click on Buy crypto
On the buying page, there are two way to buy crypto, one method is via Credit and Debit card, the second is via P2P market trade. So you can decide to choose the method you want to use and buy your crypto.
CONCLUSION
Trading involves buying and selling of goods and services. Understanding the Crypto market and how it works is very important for an investor or somebody who is new into the Crypto world. The rising and falling of assets results in both profit maximization and minimization process especially in cryptocurrencies trading.
Reliable tools like Technical analysis and fundamental studies should be optimally and carefully examined first for a price mechanism to be understood and forecasted accurately.
Also, trading and exchange can occur everywhere and anytime. There are many exchange platforms that are authentic, reliable and trustworthy with higher trading volumes.
Trading is very important in a financial market and cryptocurrency is a financial market.
I must confirm that the lecture was really an interesting one and I will say a very big thank you to you because I have learned a lot from the teaching.
Thank you 😊